Dividend Coverage Ratio (DCR) Explained: Definitions, Formulas, and Examples Dividend coverage is an important risk metric for equity analysts and investors, spotlighting a company's ability to pay dividends to its shareholders. The dividend coverage ratio (DCR) serves as a crucial metric to gauge how secure a dividend payment. This article calculates the dividend
Basis points (BPS) is the common term for 1/100th of 1 percent or 0.01%. This unit might not seem worth naming, but in bond markets for example, this is the unit for measuring daily price movements and credit spreads – i.e. the interest rate premium charged to a company because it is a weaker credit
The equity risk premium (ERP) is a crucial concept in corporate finance and investment analysis. It signifies the additional return that investors demand to invest in stocks versus risk-free assets like government bonds. Understanding the equity risk premium is vital for estimating the cost of equity and determining if an investment opportunity is worthwhile.
What is Compound Annual Growth Rate? Compound annual growth rate (CAGR) is a useful metric for presenting a variable growth trend by its implied weighted-average compound growth rate over a period of time: It smooths out volatility in growth and accounts for the compounding effect from year to year. CAGR represents the constant
Variable costs represent a critical component of financial analysis and business decision making. By understanding how to calculate and analyse variable costs, companies can properly budget, price products and services competitively, and comprehend their cost structure. What is a Variable Cost? A Variable Cost is a corporate expense that changes in proportion with activity -
Sharpe Ratio Explained: Definitions, Formulas and Examples The Sharpe Ratio is one of the most popular risk-adjusted return metrics used in investment analysis and corporate finance. It was developed by Nobel laureate William F. Sharpe and helps investors understand the return of an investment compared to its risk. The ratio is useful for
Year-over-Year (YOY): Definitions, Formulas, and Examples Understanding year-over-year (YOY) growth is a fundamental skill for graduates entering corporate finance roles. Comparing period-over-period performance provides insight into the financial health and trajectory of a business. Article Contents What is Year-Over-Year Growth? Formula for Calculating YOY Growth Calculating YOY Growth in
Over many years, as an aside to teaching about convertibles as a product, I’ve had to explain the basis for accounting for them. The accounting has always seemed pretty harmless to me until I recently made a case study out of the online luxury fashion retail platform, Far Fetch (LON:OK60)(NYSE:FTCH).
It’s a while since we last gave any book recommendations, https://www.capitalcitytraining.com/news/my-reading-list/ so here is a new list of some of the interesting books the team’s been reading, they aren’t all textbooks, but all are really interesting reads that have something to teach us about investing and the financial world we are in: “Thrillers” Freezing
One of our tech team was reviewing and testing our website and pointed out that whilst we were selling LBO modelling, we didn’t actually explain what an LBO was! So here goes. We need to start off with the private equity industry which really began in the 1980s – or rather that’s when one
